World Export Development Forum 2011

PRIVATE SECTOR ENGAGEMENT WITH LDCS FOR TOURISM-LED GROWTH AND INCLUSIVE SUSTAINABLE DEVELOPMENT

Session Summary: Official Welcome and Opening of WEDF 2011

Ms. Patricia Francis, Executive Director of ITC, welcomed delegates to the World Export Development Forum 2011, being held within the framework of the fourth United Nations Conference on Least Developed Countries (LDC-IV) in Istanbul, Turkey.

In her opening address, Ms. Francis said that despite a decade of global attention since LDC-III in Brussels in 2001, the state of the LDCs had undeniably worsened. There were more LDCs now, and they were more impoverished. From a trade point of view, the evidence produced in ITC’s 2010 report Market Access, Transparency and Fairness in Global Trade, showed that the 33 LDCs reviewed retained on average only 14 cents out of every US$ 100 of export earnings.

Ms. Francis said: ‘We know market access is necessary, but not sufficient, and while addressing macro issues may make it possible for LDC firms to be internationally competitive, it is a business’s specific capacity to produce marketable products that makes it actually happen. The private sector, particularly small and medium enterprises, will generate growth and create jobs, where competitive.’ She noted that ITC’s key strategic objective was to increase the capacity of the private sector to take advantage of the global trading system.

The aim in holding WEDF in the framework of LDC-IV is to take advantage of the presence of so many private and public sector partners supporting the LDCs to explore, define and commit to work. ITC’s intention is to come out of the WEDF and LDC-IV with a concrete plan of action for 2012 and beyond, working with LDCs and partners to achieve Export Impact for Good.

The plan of action focuses on four development projects in the tourism sector that would be the subject of workshop discussions during the forum. They would then be further developed in-country and validated by local stakeholders with a view to producing bankable project documents and commitments from implementing partners.

The four projects cover:

Engaging women vendors in the tourism value chain;

Managing tourism after a crisis;

Backward linkages for agriculture in the tourism supply chain;

Inclusive tourism through protection and promotion of cultural heritage and handicrafts.

His Excellency Mr. Ali Babaçan, Deputy Prime Minister of Turkey, told delegates that the importance of ITC was that it had a bottom-up approach, reflecting the expectations and concerns of people in LDCs. The organization focused on helping people to trade their way out of poverty, on SMEs, women and other small entrepreneurs.

He said the LDCs had suffered particularly from the crises of recent years, and that the food and energy crises had not been fully overcome. Building the productive capacities of the LDCs was a goal for the whole international community, and the services sector was playing an increasingly important role in this effort, with a growing contribution to economic growth and job creation. Among services, tourism had been identified as a potential major driver of growth, already representing the most important foreign currency earner for many of them. However, he noted that governments had tended to consider the tourism sector as marginal and the participation of the LDCs in global tourist growth was constrained by weak and underdeveloped supply capacities.

The Minister described the development of Turkey’s tourism industry over the past 30 years, noting that today twice as many people were employed in tourism as in manufacturing. Turkey was now the eighth most important tourist destination in the world, with nearly 29 million visitors annually. However, he cautioned of the importance of protecting the cultural and physical environment on which tourism depended. It was essential not to kill the goose that laid the golden eggs.

Dr. Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), reiterated the importance of tourism for development in the LDCs, with more than half of them depending on tourism as a major source of export earnings. He noted that in the three LDCs that have been in the process of graduating out of the category, Cape Verde, the Maldives and Samoa, tourism had made an important contribution to their graduation. There were 10 more LDCs expected to graduate in the next decade, and in all of them tourism had been identified as one of the key factors helping them over the threshold.

Dr. Supachai said the last decade had been one of growth, but it had not had an impact on poverty. To ensure this would not continue, there was a need to transform the LDCs structurally, and one way to do this was to target capacity building. He explained how the 10 United Nations agencies and five regional commissions working together in the Cluster for Trade and Productive Capacity were working to help reduce bureaucracy and red tape. In this area, the role of the private sector had been identified as particularly important: the state has an important role in developing policies, which could not be left to the market, but should focus on working with the private sector.

In concluding, Dr. Supachai made three key points:1. It is important for the State to understand that tourism is about more than earning money, raising revenue and bringing in investment – that was missing the point. Tourism needed to be linked to the creative economy, engaging in multi-stakeholder dialogue at all times.2. Tourism needed to be sustainable, involving local communities and benefiting the poor. There was an important issue of leakage – that is the level of profits being repatriated by foreign investors.3. The importance of regional cooperation should not be overlooked: it was easier and cheaper for countries to work together. He noted that Asia had been very successful in mobilizing tourism on a regional basis.

Mr. Pascal Lamy, Director-General of the World Trade Organization (WTO), said that the tourism sector had some interesting characteristics, from the WTO perspective. Not many markets could point to steady growth in the range of 5% to 7%, even though the LDC share was tiny, at around 1% of the global total. It was also a resilient market, as was demonstrated by the fact that the fall of LDC travel-related exports during the economic crisis was limited to 4%, much less than other sectors. Tourism was also a sector where access to the market was relatively easy, and it did not suffer from serious market-distorting subsidies.

However, Mr. Lamy warned that tourism is not a simple issue. It might have looked simple, like agriculture, but in fact it was very complex. Growing the tourism sector is a multifaceted issue with huge significance for the private sector and a major role for the public authorities in ensuring skills, knowledge, infrastructure and quality standards. It is important that each international agency should bring its own strengths to the effort to support tourism development in the LDCs. In the case of WTO, this involved two areas: its core business of rule-making, providing a predictable, stable playing field for businesses; and capacity building through the Aid for Trade initiative.

Mr. Ed Fuller, President and Managing Director, Marriott International Lodging, described Marriott’s social responsibility strategy in developing countries, which focused on providing shelter and food, protecting the environment, preparing local people for careers in the hotel business, ensuring the vitality of children and embracing global diversity and inclusion.

He outlined the way the company was seeking to address environmental challenges through innovative conservation initiatives. An example was an agreement signed by Marriott in 2008 with the State of Amazonas in Brazil and the Amazonas Sustainable Foundation, to protect 1.4 million acres of rainforest – the Juma Sustainable Development Reserve. The company had committed US$ 2 million to the project. Spending would include the development of an environmental management plan, funding of a school, provision of new emergency boats, mosquito netting, medical equipment, rainwater cisterns and solar panels for school electricity.

Another conservation programme had been launched in the Sichuan Province in China, which was hit by the earthquake in 2008, to support a vital water conservation programme. Marriott hotels had committed to reducing their water and energy use by 25% within 10 years, Mr. Fuller said.

In response to a question, Mr. Fuller said Marriott had an advantage in investing in LDCs because of its multiple brands. Currently it was building in Rwanda and Ghana and seeking other LDC markets. On the question of maximizing linkages to local markets, he said Marriott had a policy to spend a year before opening a hotel working with the markets, establishing standards with farmers and other vendors, and explaining it expectations. Because its policy is to recruit locally, Marriot also focuses on education and training, particularly in countries where there is no established hotel market.

Dr. Taleb Rifai, Secretary-General of the World Tourism Organization (UNWTO), said that a few years ago the voice of the organization was a lonely one. Tourism seemed to be of relevance only to those who could afford to dream. Yet now the WEDF was focusing on tourism for the first time, and the Director-General of WTO had emphasized its importance. Finally there was an acknowledgement that tourism had become a central global phenomenon. Against all the odds, people felt it was their human right to travel, creating jobs and income and improving the lives of communities. Tourism was joining with other non-traditional sectors such as sport and the arts in taking over from more traditional activities in terms of their impact on lives.

There was thus a need to pay more attention to these service sectors, and governments had a major responsibility to meet the needs of tourism and of host communities, while protecting the future. Governments needed to design appropriate policy frameworks and prevent unsustainable practices. The role of the private sector is also crucial, as is ensuring its socially responsible approach. It was not appropriate to build five star facilities in two star communities, to create islands of affluence in deprived communities. Respecting the environment and the surrounding socio-economic area is a particular challenge for the private sector, particularly small- and medium-sized enterprises.

Ms. Victoire Ndikumana, Minister of Trade and Industry, Burundi, said that international tourism was one of the most important industries for job creation and foreign currency earning in many countries. In Africa, it had shown positive growth despite the crisis. Economic integration was opening up possibilities for establishing various services, including tourism.

She said that in recent years, Burundi had stabilized and security was being established. Elections had been successfully held. Action was being taken to attract investment from the private sector, and tourism appeared to be a lever for economic growth and a driving engine for many other sectors too. Although tourism was still embryonic, it had clear potential and the government was actively developing partnerships with the private sector, civil society organizations and international organizations.

The minister stressed that while peace and political stability were prerequisites for any development, this was especially so in the case of tourism. Tourists would flee unstable regions, as the recent experience in North Africa had shown. LDCs should therefore make the consolidation of peace and political stability their number one priority; in turn tourism, as a driver of social and economic progress, would also become a driver of peace.

Ms. Ndikumana said that her country saw great potential in the development of tourism through regional integration, for example through introducing a single tourist visa for East African countries. She also noted the potential of tourism to develop marginalized areas of the country and help reduce the rural exodus to the cities and narrow the huge rural-urban gap.

H.E. Dr. Luzius Wasescha, Ambassador of the Permanent Mission of Switzerland to the WTO, said that Switzerland, being itself a famous tourist destination, was particularly keen to put sustainable tourism on the front-burner of discussions. Income from tourism accounted for roughly one third of the country’s total export earnings. This reflected some 36 million tourist nights in 2010 and showed the importance of tourism in the services industry.

The ambassador said that while tourism could create positive effects for a whole region there were also risks associated. On the positive side, suppliers of all kinds of goods and services could benefit from increased demand. Jobs were created and migration patterns might improve by stopping people from leaving otherwise less-productive areas. But on the potential negative side, it was necessary to take into account environmental impacts as well as socio-economic dynamics that could be affected. Today’s tourism demanded more and more not only quantity but also better quality. Before deciding on a destination, travellers investigated a destination in terms of safety and security, observation of ethical and social standards and of environmental impacts.

He concluded: ‘Let me assure you of the continued interest and support of my government in promoting sustainable tourism also together with our global partners. Our strategic orientation includes the strengthening of competitiveness and sustainability of touristic offers, the improvement of a conducive institutional framework and improving market access and touristic information.’

ConclusionIn summarizing the discussions, Ms. Francis drew attention to a number of key issues:

The critical importance of public-private partnerships;

Tourism as an important driver for LDC growth;

The importance of sustainability in tourism development;

The important role of the State in the promotion and facilitation of tourism;

The question of benefits to the host country and leakage of profits;

The importance of governments thinking seriously about tourism;

The challenge of working with SMEs and establishing an ethical framework for development;